GM's discounts to expire Monday

That's when the automaker unveils its `value pricing' strategy for the 2006 models.

July 28, 2005|By Jim Mateja, Chicago Tribune

General Motors Corp. will end its program of offering employee pricing to all buyers on Monday, when it plans to announce prices for its 2006 models.

"The employee pricing program did as intended, it reduced inventories of '05 models," GM spokesman Jeff Kuhlman said.

For the new model year, GM is introducing a "value pricing" strategy aimed at removing the padding that had been added to stickers to provide the cushion necessary to offer rebates.

"That's what we want to do for '06, shift away from `What's the deal?' and `How many dollars off?' and focus on the product," Kuhlman said.

Ford and Chrysler also are offering employee pricing through Monday. Both said they will decide the future of those discount programs after GM makes its move next week.

Employee pricing was so successful, with sales rising 47 percent in June alone, that GM inventories of 2005 vehicles are down considerably.

"Dealers may have fewer of some models than they'd like, which proves employee pricing worked, but it's not a case of dealers having nothing to sell," Kuhlman said. "And we have '06 product in the pipeline that will arrive this week and next."

Inventories of well-equipped vehicles reportedly are low because those are the ones consumers snapped up under employee pricing.

"In May, the average sticker price on vehicles sold was around $29,000, but in June it went up to $31,800 as people bought vehicles with everything on them," said Art Spinella, general manager of CNW Marketing Research. "But the average sticker price on vehicles sold went to $30,600 in July as fewer cars with high content were left and cars with sunroofs, for example, were bought up."

GM, after a $1.1 billion first-quarter loss, used the discounts to halt a decline in U.S. sales and market share and make room for the 2006 models. The challenge will be to sustain gains against Toyota Motor Corp. and other rivals.

It's thought that up to half of GM's models will carry lower sticker prices for 2006, but Kuhlman wouldn't say on Wednesday.